In the first couple of years, business owners often struggle with understanding how much work running a business is and how long it can take to have a profitable business.
Angela Sutcliffe is a business consultant (and Smart Old Broad) who draws on 30 years of knowledge and experience to move her clients beyond the start up phase. Angela works with business owners to design and implement strategies that are relevant to their business and their industry to make them consistently profitable. Over the years, she has won many awards for her business acumen, as have her clients, but the one thing she is most proud of is being selected by Kevin O'Leary's production company to work with the winner and runner up of his reality TV show, Redemption Inc. as they rolled out their new businesses.
I spoke with Angela about what she believes every business owner needs to know before taking his or her business to the next level.
Know your numbers
According to Angela, 90% of businesses are gone within two years. Business owners don’t understand what profitable means because they don’t pay attention to their numbers—instead they work to build a business that makes their clients happy, but does not make money. If you’re not bringing home a pay cheque then your business is not going to work.
If a business owner does not know how much money they are making or if they don’t know if they are making enough to support the lifestyle surrounding it (their bottom line) then they are working to please their customers while simultaneously going broke. If you start your business with a number in mind then you can work from there.
You can’t make up numbers based on what you think people will pay instead of what you need to earn. Money is the one thing people avoid, but once you understand that a number is just a number you can work towards earning that number.
How much it costs to run her businesses and how big her pay cheque needs to be – those are the two numbers that, added together, make up her sales target.
Freedom and comfort comes from knowing your numbers. If you know your numbers and see that you're not hitting them, then you can look and see if you are trying to sell high price items to a market that cannot afford it, etc. so you can determine what exactly is not working.
Know your sales cycles
Have you heard about the hundred percent solution? It goes like this: in your first two years of business you sell to your friends and family and their friends, and then at the end of those two years, your sales stop. That’s because you made the easiest sales possible—you sold to the 20% of the market that will buy from you now.
In order to succeed, within 1.5 years of selling you have to learn about how the sales cycle and process works, and how to sell to the other 80% of the marketplace. If you don’t, you will fail.
So, what is a sales cycle? Well, think about how many business owners believe a customer when they say they have to 'think it over'? Most think that means they'll never buy, but believe it or not, most customers really do need to think about it. Did you know that 24-36 months after an initial interaction is when 80% of your sales will happen? When you think about the number of people who come back to you a year or so after they are first introduced to your business or product, that's a good demonstration of you sales cycle.
There are generally three steps to a sales process – meet a potential client and follow up with card, go out for coffee, and have a closing conversation. However, people may surprise you and want to meet for coffee and say they are following you online, or met you at a networking event a year or so ago and now they're ready to work with you even though you've never met them—it’s happened to Angela! But to get there you need to do the work because the sales cycle was happening behind the scenes.
It can be discouraging and you may not think anyone is listening to you, but remember the 20% and 80%! Think long term and in two years you will be closing the 80%. Sales isn’t anyone’s job, activity is the job—sales is the result. If you have good marketing activity and get yourself out there then you will make the sale. Just keep in mind that you won’t be a millionaire by midnight.
Keep in touch with past clients
Your next best sale can come from your past clients – they know you and love you and have had a great experience with you, so you should always keep in touch with them—and not in a salesy way. There are all kinds of ways to keep in touch with people, including inviting them to attend events, or just catching up on social media. Make them feel important.
While they may not work with you now, past clients may know someone who would be perfect for you, so keeping those relationships healthy is in your best interest.
Stop doing, start planning
One of the hardest things for business owners, at any level, is the drive to keep doing things. Before you exhaust yourself by doing things that may be futile, remember that the best thing anyone can do is to stop and plan.
Plan your finances – for marketing and your business.
Stop and get advice, so that you’re optimizing your products and business. Business can get expensive, so it’s important to stop running your business and plan what comes next.
The keys to the kingdom are in planning.
All business owners stumble. Even Angela had to get help with her business; she had almost bankrupted her cleaning business and it took two hard years to turn it around. You have to swallow your pride and ask for help, plan and work. Seek help from the right people – it’s the behind the scenes that can make or break your business.
Leave a comment and tell us what your sales cycle is, or let us know if you have any questions!